Stability of Cournot equilibria under discrete best-reply dynamics with non-negative output constraints

•This paper explores the stability of Cournot equilibria under discrete best-reply dynamics.•Non-negative output constraints are imposed over time in firm's output adjustment processes.•Cournot equilibria are globally stable under some conditions when firms produce complement goods.•Cournot equilibria are not stable unless all firms producing substitute goods are efficient enough.

This paper explores the stability of Cournot equilibria under discrete best-reply dynamics with non-negative output constraints. When firms produce complement goods, Cournot equilibria are the unique and globally stable solutions of the dynamics under some stability conditions, and all firms will survive in the long run regardless of their efficiency levels. By contrast, if firms produce substitute goods, Cournot equilibria are neither the limit of the dynamics nor stable unless all firms are efficient enough.